Keypoints:
- State oil companies sign Vitol agreement
- Hub could attract more than $20bn
- Financing and refining capacity remain unclear
UGANDA’S national oil company and Tanzania’s petroleum corporation have signed a memorandum of understanding (MoU) with Vitol Bahrain E.C. to pursue the Tanga energy hub, potentially combining refining, storage and regional fuel distribution around EACOP.
The agreement signals a fresh effort to retain more value from Uganda’s crude within East Africa, but it remains at an early stage. Officials have disclosed no refining capacity, committed financing, final investment decision or construction timetable — details that will determine whether the hub becomes a bankable project.
Tanga targets more than crude exports
Presidents Yoweri Museveni and Samia Suluhu Hassan witnessed the signing on August 6, 2026, during the Ugandan leader’s two-day visit to Tanzania.
The agreement brings together the Uganda National Oil Company (UNOC), Tanzania Petroleum Development Corporation (TPDC) and Vitol Bahrain E.C. under a framework for developing the Tanga Regional Energy Hub.
Uganda State House described the proposed development as encompassing petroleum refining, storage, logistics, trading and distribution.
TPDC used stronger language, describing the agreement as covering construction of a crude oil refinery valued at more than TSh56tn ($21.2bn). Uganda State House, however, presented the $20bn figure as the investment potential of the wider hub rather than committed project financing.
The distinction underlines why the commercial status of the proposal remains important.
The hub would build on the 1,443-kilometre East African Crude Oil Pipeline, which runs from Uganda’s western oilfields to a marine terminal near Tanga. EACOP’s developers say the underground heated pipeline will have a peak capacity of 246,000 barrels a day.
$20bn remains an ambition
Tanzania’s Energy Minister Deo Ndejembi said the hub could attract more than $20bn, potentially making it one of sub-Saharan Africa’s largest integrated energy developments.
The announcement does not disclose Vitol’s prospective equity, the estimated cost of individual components or how much capital the two state-owned companies would contribute.
Vitol is not entering Uganda’s energy market from scratch. According to UNOC, the company already supplies petroleum products under Uganda’s centralised fuel-import system, giving the proposed partnership an existing commercial foundation.
Ndejembi said EACOP would transport crude while the Tanga hub would convert that resource into wider industrial and trading opportunities.
Uganda’s Energy Minister Monica Musenero presented the project as part of Africa’s push to process more of its resources locally instead of exporting unprocessed commodities. She said downstream industries could support employment in engineering, laboratory analysis, operations, maintenance and management.
Those gains will depend on the eventual scale, financing and economic viability of the facilities.
Hoima and Tanga seek different markets
Officials insist that Tanga will complement rather than displace Uganda’s planned $4bn Hoima refinery.
The Hoima facility is designed to process 60,000 barrels a day and supply Uganda’s domestic market. UAE-based Alpha MBM Investments is expected to hold 60 percent of the project, with UNOC retaining 40 percent.
Reuters reported on August 5 that the Petroleum Authority of Uganda expects a final investment decision in February 2027 following repeated delays. The postponement has placed earlier plans to begin operations before 2030 under growing pressure.
Tanga is being positioned differently: as an industrial, storage and logistics platform serving markets across East and Central Africa.
A proposed bidirectional multi-product pipeline could allow refined fuels to move between Uganda and Tanzania according to market demand, giving Hoima access to Tanzania’s coast while supporting fuel distribution inland.
Pipelines anchor wider energy plan
Feasibility and front-end engineering studies for the refined-products pipeline and storage terminal are expected to be completed later in 2026.
The announcement does not indicate that equivalent engineering work for a Tanga refinery has been completed, making the refining component less advanced than the pipeline and storage proposals.
Uganda and Tanzania are also revisiting their proposed cross-border natural gas pipeline</a>. Officials expect the feasibility study to conclude by October 2026.
Beyond hydrocarbons, the countries are developing a 400 kV electricity interconnector to strengthen regional power trading. The World Bank approved $250m in concessional financing for Uganda’s section in June.
Together, the oil, gas, fuel-products and electricity links point towards a more integrated regional energy market. Each project nevertheless carries separate financing, regulatory, environmental and execution risks.
EACOP remains the subject of legal and environmental challenges, potentially exposing future projects around the corridor to similar scrutiny.
Lamu sharpens the regional contest
The Tanga proposal adds a new dimension to East Africa’s emerging refinery race.
Nigeria’s Dangote Group is advancing a proposed 700,000-barrel-a-day refinery in Lamu, Kenya. The company has selected the coastal site and begun preliminary engineering and soil investigations, although a final investment decision has not been announced.
If both projects proceed, Tanga and Lamu could compete for financing, fuel buyers and regional distribution routes.
The proposed Dangote refinery in Kenya would be considerably larger than Uganda’s Hoima facility. Tanga’s refining capacity has not been disclosed, making direct comparisons premature.
The next meaningful test will be whether the Tanga partners publish a defined project scope, ownership structure, refining capacity and financing plan.
Until then, the MoU represents a potentially significant regional commitment — but not yet a final decision to build.
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